Significant Progress in Hy Capabilities and Productivity AI Agents
Utilising AI to Grow Existing Core Businesses
HONG KONG, May 13, 2026 /PRNewswire/ -- Tencent Holdings Limited (HKEX: 00700 (HKD Counter) and 80700 (RMB Counter), "Tencent" or "the Company"), a world-leading Internet and technology company in China, today announced the unaudited consolidated results for the quarter ended 31 March 2026 ("1Q2026").
Mr. Ma Huateng, Chairman and CEO of Tencent, said, "We started 2026 by making significant initial progress on our new AI products, as well as continuing to utilise AI to grow our existing core businesses. The Hy3 preview model, built by our revamped team of AI researchers on re-architected AI infrastructure, is a leader in its parameter size class, delivering practical utility and cost efficiency, and has been top ranked in OpenRouter token measurements since April 28. Our productivity AI agent solutions have attained early traction, and we believe that our WorkBuddy is currently the most widely used productivity AI agent service in China. Our core businesses continued to grow their engagement, revenue and profit, providing the cash flow to fund our AI investments, as well as use cases for future AI deployment."
1Q2026 Financial Highlights
Revenues: +9% YoY, gross profit: +11% YoY, non-IFRS operating profit: +9% YoY
- Total revenues were RMB196.5 billion, up 9% over the first quarter of 2025 ("YoY").
- Gross profit was RMB111.3 billion, up 11% YoY.
- On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:
- Operating profit was RMB75.6 billion, up 9% YoY. Operating margin was largely stable at 38.5%.
- Operating profit excluding new AI products[1] was RMB 84.4 billion, increased by 17% YoY. Operating margin excluding new AI products increased to 43.0% from 39.9% last year.
- Net profit was RMB 69.8 billion, up 11% YoY.
- Net profit attributable to equity holders of the Company was RMB67.9 billion, up 11% YoY.
- Basic earnings per share were RMB7.517. Diluted earnings per share were RMB7.364.
- On an IFRS basis:
- Operating profit was RMB67.4 billion, up 17% YoY. Operating margin increased to 34.3% from 32.0% last year.
- Net profit was RMB59.4 billion, up 19% YoY.
- Net profit attributable to equity holders of the Company was RMB58.1 billion, up 21% YoY.
- Basic earnings per share were RMB6.431. Diluted earnings per share were RMB6.302.
- Capital expenditure was RMB31.9 billion, up 16% YoY.
- Total cash was RMB533.7 billion, up 12%. Free cash flow was RMB56.7 billion, up 20% YoY. Net cash position totalled RMB146.9 billion, up 63%.
- The fair value of our shareholdings[2] in listed investee companies (excluding subsidiaries) totalled RMB547.1 billion as at 31 March 2026, compared with RMB672.7 billion as at 31 December 2025. The carrying book value of our shareholdings in unlisted investee companies (excluding subsidiaries) was RMB365.1 billion as at 31 March 2026, compared with RMB363.1 billion as at 31 December 2025.
- During 1Q2026, the Company repurchased approximately 12.7 million shares on the Hong Kong Stock Exchange for an aggregate consideration of approximately HKD7.6 billion.
[1] Excludes revenues, costs and expenses for new AI products (Hy, Yuanbao, CodeBuddy, WorkBuddy, and QClaw) |
[2] Including those held via special purpose vehicles, on an attributable basis |
1Q2026 Management Discussion and Analysis
Revenues from VAS increased by 4% year-on-year to RMB96.1 billion for 1Q2026. Domestic Games revenues were RMB45.4 billion, up 6% YoY, with revenue growth lagging Domestic Games gross receipts growth, as the later timing of the Spring Festival period in 2026 versus 2025 shifted a portion of revenue recognition out of the current quarter. Domestic Games gross receipts grew at a teens percentage rate YoY, driven by existing evergreen games including Honour of Kings and Peacekeeper Elite, as well as more recent game releases including Delta Force, which has recently qualified for the definition of an evergreen game, and VALORANT Mobile. International Games revenues were RMB18.8 billion, up 13% YoY (14% on a constant-currency basis), primarily driven by higher revenues from Clash Royale, Wuthering Waves and VALORANT PC. Social Networks revenues decreased by 2% YoY to RMB31.9 billion, as the later timing of the Spring Festival period resulted in less revenue recognition for domestic app-based game item sales during 1Q2026 versus 1Q2025.
Revenues from Marketing Services were RMB38.2 billion for 1Q2026, up 20% YoY, improving from 17% YoY growth in 4Q2025. We upgraded our AI-driven ad recommendation model and expanded closed-loop marketing capabilities within the Weixin ecosystem, which improved ad performance and pricing. Advertising spending grew across most major industry categories during the quarter, with notable growth from Internet services, eCommerce and games categories.
Revenues from FinTech and Business Services increased by 9% YoY to RMB59.9 billion for 1Q2026. FinTech Services revenue growth was mainly due to higher revenues from commercial payment and wealth management services. Business Services revenues rose by 20% YoY, with growth led by increased cloud services revenues supported by higher demand across domestic and international markets, including demand for AI-related services, and a more favorable pricing environment, as well as higher eCommerce technology service fees arising from growth in Mini Shops GMV.
Operating Metrics
As at 31 March 2026 | As at 31 March 2025 | Year- on-year change | As at 31 December 2025 | Quarter- change | ||
(in millions, unless specified) | ||||||
Combined MAU of Weixin and WeChat | 1,432 | 1,402 | 2 % | 1,418 | 1 % | |
Mobile device MAU of QQ | 516 | 534 | -3 % | 508 | 2 % | |
Fee-based VAS subscriptions[3] | 266 | 268 | -0.7 % | 267 | -0.4 % | |
1Q2026 Business Review and Outlook
- Several of our evergreen games[4] achieved life-time highs in quarterly gross receipts, including Honour of Kings, Peacekeeper Elite and Delta Force, while new game Roco Kingdom: World achieved substantial popularity.
- Our automated campaign management solution AIM+ powered approximately 30% of our total marketing services spending from advertisers, gaining notable traction among mini game, mini drama and mini shop advertisers.
- We scaled up the number of parameters and enhanced the algorithms for Video Accounts' content recommendation model, enabling delivery of more relevant content to users. Total time spent on Video Accounts grew over 20% year-on-year.
- Mini Shops sustained a rapid year-on-year growth rate in GMV as we offered incentives for brand merchants and introduced coupon sharing features for frequent buyers.
- Commercial payment volume grew at a faster year-on-year rate than 4Q2025, benefitting from ongoing increase in number of transactions and higher value per transaction in categories such as retail and dining services.
- Tencent Cloud's productivity AI agent solutions achieved rapid growth and healthy retention rates. Among which, WorkBuddy was the most popular productivity AI agent service in China, measured by DAU.
- In April, we launched the Hy3 preview large language model, building upon a revamped AI infrastructure. We believe the Hy3 preview model is currently best in class among similar-size models in terms of reasoning, agentic and coding capabilities, and has become the most used model on OpenRouter since April 28, measured by token usage.
[3] Average daily number of subscriptions during the quarter |
[4] Evergreen games refer to domestic and international games surpassing average quarterly DAU of 5 million for mobile or 2 million for PC, and generating over RMB4 billion annual gross receipts |
For other detailed disclosure, please refer to our website https://www.tencent.com/en-us/investors.html, or follow us via Weixin Official Account (Weixin ID: TencentGlobal)
About Tencent
Tencent uses technology to enrich the lives of Internet users.
Our communication and social services, Weixin and QQ, connect users with each other and with digital content and services, both online and offline, making their lives more convenient. Our targeted marketing services helps advertisers reach out to hundreds of millions of consumers in China. Our FinTech and business services support partners' business growth and assist their digital upgrade.
Tencent invests heavily in talent and technological innovation, actively promoting the development of the Internet industry. Tencent was founded in Shenzhen, China, in 1998. Tencent has been listed on the Main Board of the Stock Exchange of Hong Kong since 2004.
Investor contact: [email protected]
Media contact: [email protected]
Non-IFRS Financial Measures
To supplement the consolidated results of the Group ("the Company and its subsidiaries") prepared in accordance with IFRS, certain additional non-IFRS financial measures (in terms of operating profit, operating margin, profit for the period, profit attributable to equity holders of the Company, basic EPS and diluted EPS) have been presented in this press release. These unaudited non-IFRS financial measures should be considered in addition to, not as a substitute for, measures of the Group's financial performance prepared in accordance with IFRS. In addition, these non-IFRS financial measures may be defined differently from similar terms used by other companies.
The Company's management believes that the non-IFRS financial measures provide investors with useful supplementary information to assess the performance of the Group's core operations by excluding certain non-cash items and certain impact of investment-related transactions. In addition, non-IFRS adjustments include relevant non-IFRS adjustments for the Group's major associates based on available published financials of the relevant major associates, or estimates made by the Company's management based on available information, certain expectations, assumptions and premises.
Forward-Looking Statements
This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Group. These forward-looking statements are based on information currently available to the Group and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.
CONDENSED CONSOLIDATED INCOME STATEMENT
RMB in millions, unless specified
Unaudited | |||
1Q2026 | 1Q2025 | 4Q2025 | |
Revenues | 196,458 | 180,022 | 194,371 |
VAS | 96,110 | 92,133 | 89,920 |
Marketing Services | 38,171 | 31,853 | 41,116 |
FinTech and Business Services | 59,885 | 54,907 | 60,818 |
Others | 2,292 | 1,129 | 2,517 |
Cost of revenues | (85,193) | (79,529) | (86,082) |
Gross profit | 111,265 | 100,493 | 108,289 |
Gross margin | 57 % | 56 % | 56 % |
Selling and marketing expenses | (11,343) | (7,866) | (12,983) |
General and administrative expenses | (33,800) | (33,664) | (36,283) |
Other gains/(losses), net | 1,253 | (1,397) | 1,315 |
Operating profit | 67,375 | 57,566 | 60,338 |
Operating margin | 34 % | 32 % | 31 % |
Net gains/(losses) from investments and others | 1,928 | 1,407 | 3,303 |
Interest income | 4,025 | 3,748 | 4,784 |
Finance costs | (2,979) | (3,860) | (3,573) |
Share of profit/(losses) of associates and joint | 3,620 | 4,581 | 6,832 |
Profit before income tax | 73,969 | 63,442 | 71,684 |
Income tax expense | (14,577) | (13,717) | (12,595) |
Profit for the period | 59,392 | 49,725 | 59,089 |
Attributable to: | |||
Equity holders of the Company | 58,093 | 47,821 | 58,260 |
Non-controlling interests | 1,299 | 1,904 | 829 |
Non-IFRS operating profit | 75,627 | 69,320 | 69,518 |
Non-IFRS profit attributable to equity | 67,905 | 61,329 | 64,694 |
Earnings per share for profit attributable to (in RMB per share) | |||
- basic | 6.431 | 5.252 | 6.433 |
- diluted | 6.302 | 5.129 | 6.276 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
RMB in millions, unless specified
Unaudited | ||
1Q2026 | 1Q2025 | |
Profit for the period | 59,392 | 49,725 |
Other comprehensive income, net of tax: | ||
Items that may be subsequently reclassified to profit or loss | ||
Share of other comprehensive income of associates and joint ventures | (222) | 652 |
Transfer of share of other comprehensive income to profit or loss upon disposal | 135 | - |
Net (losses)/gains from changes in fair value of financial assets at fair value | (60) | 106 |
Transfer to profit or loss upon disposal of financial assets at fair value through | (19) | 1 |
Currency translation differences | (13,883) | 2,294 |
Net movement in reserves for hedges | (5) | (213) |
Items that will not be subsequently reclassified to profit or loss | ||
Share of other comprehensive income of associates and joint ventures | (330) | 522 |
Net (losses)/gains from changes in fair value of financial assets at fair value | (66,118) | 26,361 |
Currency translation differences | (2,887) | 370 |
Net movement in reserves for hedges | (3) | 6 |
(83,392) | 30,099 | |
Total comprehensive income for the period | (24,000) | 79,824 |
Attributable to: | ||
Equity holders of the Company | (22,676) | 75,858 |
Non-controlling interests | (1,324) | 3,966 |
OTHER FINANCIAL INFORMATION
RMB in millions, unless specified
Unaudited | |||
1Q2026 | 1Q2025 | 4Q2025 | |
EBITDA (a) | 84,167 | 73,817 | 77,126 |
Adjusted EBITDA (a) | 89,617 | 81,559 | 83,048 |
Adjusted EBITDA margin (b) | 46 % | 45 % | 43 % |
Interest and related expenses | 3,134 | 3,386 | 3,323 |
Net cash (c) | 146,860 | 90,229 | 107,145 |
Capital expenditures (d) | 31,936 | 27,476 | 19,632 |
Note: |
(a) EBITDA is calculated as operating profit minus other gains/(losses), net, and adding back depreciation of property, plant and equipment, investment properties as well as right-of-use assets, and amortisation of intangible assets and land use rights. Adjusted EBITDA is calculated as EBITDA plus equity-settled share-based compensation expenses |
(b) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues |
(c) Net cash represents period end balance and is calculated as cash and cash equivalents, plus term deposits and others, including highly liquid investment products held for treasury purposes, minus borrowings and notes payable |
(d) Capital expenditures primarily consist of investments in IT infrastructure (including computer equipment, components, and software), data centres, land use rights, office premises and intellectual properties (excluding media content) |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
RMB in millions, unless specified
Unaudited | Audited | |||
As at 31 March, 2026 | As at 31 December, 2025 | |||
ASSETS | ||||
Non-current assets | ||||
Property, plant and equipment | 165,666 | 149,905 | ||
Land use rights | 22,122 | 22,339 | ||
Right-of-use assets | 17,353 | 17,367 | ||
Construction in progress | 5,719 | 9,670 | ||
Investment properties | 1,131 | 950 | ||
Intangible assets | 199,008 | 205,999 | ||
Investments in associates | 330,532 | 342,409 | ||
Investments in joint ventures | 6,374 | 6,303 | ||
Financial assets at fair value through profit or loss | 208,887 | 207,157 | ||
Financial assets at fair value through other comprehensive income | 298,052 | 356,640 | ||
Prepayments, deposits and other assets | 45,424 | 24,540 | ||
Other financial assets | 1,084 | 1,327 | ||
Deferred income tax assets | 29,698 | 28,618 | ||
Term deposits | 73,404 | 70,302 | ||
1,404,454 | 1,443,526 | |||
Current assets | ||||
Inventories | 582 | 530 | ||
Accounts receivable | 58,116 | 49,930 | ||
Prepayments, deposits and other assets | 117,147 | 111,270 | ||
Other financial assets | 3,779 | 4,201 | ||
Financial assets at fair value through profit or loss | 27,627 | 35,929 | ||
Financial assets at fair value through other comprehensive income | 8,781 | 8,781 | ||
Term deposits | 205,537 | 236,801 | ||
Restricted cash | 7,597 | 6,977 | ||
Cash and cash equivalents | 217,770 | 141,041 | ||
646,936 | 595,460 | |||
Total assets | 2,051,390 | 2,038,986 | ||
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
RMB in millions, unless specified
Unaudited | Audited | |||
As at 31 March, 2026 | As at 31 December, 2025 | |||
EQUITY | ||||
Equity attributable to equity holders of the Company | ||||
Share capital | - | - | ||
Share premium | 68,575 | 63,796 | ||
Treasury shares | (1,060) | (3,450) | ||
Shares held for share award schemes | (8,605) | (7,124) | ||
Other reserves | 7,640 | 90,494 | ||
Retained earnings | 1,061,102 | 1,010,436 | ||
1,127,652 | 1,154,152 | |||
Non-controlling interests | 83,975 | 86,913 | ||
Total equity | 1,211,627 | 1,241,065 | ||
LIABILITIES | ||||
Non-current liabilities | ||||
Borrowings | 207,881 | 208,369 | ||
Notes payable | 124,350 | 126,204 | ||
Long-term payables | 10,752 | 10,544 | ||
Other financial liabilities | 3,679 | 2,879 | ||
Deferred income tax liabilities | 23,591 | 21,684 | ||
Lease liabilities | 13,074 | 13,280 | ||
Deferred revenue | 2,564 | 2,210 | ||
385,891 | 385,170 | |||
Current liabilities | ||||
Accounts payable | 141,748 | 121,127 | ||
Other payables and accruals | 81,153 | 96,496 | ||
Borrowings | 51,114 | 42,618 | ||
Notes payable | 3,460 | 10,542 | ||
Current income tax liabilities | 19,961 | 18,558 | ||
Other tax liabilities | 6,130 | 3,723 | ||
Other financial liabilities | 3,355 | 3,992 | ||
Lease liabilities | 5,632 | 5,386 | ||
Deferred revenue | 141,319 | 110,309 | ||
453,872 | 412,751 | |||
Total liabilities | 839,763 | 797,921 | ||
Total equity and liabilities | 2,051,390 | 2,038,986 | ||
RECONCILIATIONS OF THE GROUP'S NON-IFRS FINANCIAL MEASURES TO THE NEAREST MEASURES PREPARED IN ACCORDANCE WITH IFRS
As reported | Adjustments | Non-IFRS | ||||||
RMB in millions, unless specified | Share-based compensation (a) | Net (gains)/losses | Amortisation of intangible assets (c) | Impairment provisions/ | SSV & CPP (e) | Income tax effects (f) | ||
Unaudited three months ended 31 March 2026 | ||||||||
Operating profit | 67,375 | 6,534 | – | 1,578 | – | 140 | – | 75,627 |
Share of profit/(loss) of associates and | 3,620 | 810 | 817 | 1,612 | 264 | – | – | 7,123 |
Profit for the period | 59,392 | 7,344 | (3,255) | 3,190 | 2,467 | 765 | (130) | 69,773 |
Profit attributable to equity holders | 58,093 | 7,193 | (3,342) | 2,862 | 2,397 | 765 | (63) | 67,905 |
Operating margin | 34 % | 38 % | ||||||
Unaudited three months ended 31 March 2025 | ||||||||
Operating profit | 57,566 | 10,100 | – | 1,515 | – | 139 | – | 69,320 |
Share of profit/(loss) of associates and | 4,581 | 968 | 111 | 1,713 | 267 | – | – | 7,640 |
Profit for the period | 49,725 | 11,068 | (31) | 3,228 | (689) | 160 | (769) | 62,692 |
Profit attributable to equity holders | 47,821 | 10,833 | 1,081 | 2,854 | (719) | 160 | (701) | 61,329 |
Operating margin | 32 % | 39 % | ||||||
Unaudited three months ended 31 December 2025 | ||||||||
Operating profit | 60,338 | 7,210 | – | 1,594 | – | 376 | – | 69,518 |
Share of profit/(loss) of associates and | 6,832 | 773 | (26) | 1,522 | 46 | – | – | 9,147 |
Profit for the period | 59,089 | 7,983 | (7,479) | 3,116 | 3,617 | 1,338 | (953) | 66,711 |
Profit attributable to equity holders | 58,260 | 7,902 | (7,515) | 2,793 | 2,812 | 1,338 | (896) | 64,694 |
Operating margin | 31 % | 36 % | ||||||
Note: |
(a) Including put options granted to employees of investee companies on their shares and shares to be issued under investee companies' share-based incentive plans which can be acquired by the Group, and other incentives |
(b) Including net (gains)/losses on deemed disposals/disposals of investee companies, fair value changes arising from investee companies, and other expenses in relation to equity transactions of investee companies |
(c) Amortisation of intangible assets resulting from acquisitions |
(d) Mainly including impairment provisions/(reversals) for associates, joint ventures, goodwill and other intangible assets arising from acquisitions |
(e) Mainly including donations and expenses incurred for the Group's Sustainable Social Value and Common Prosperity Programme ("SSV & CPP") initiatives |
(f) Income tax effects of non-IFRS adjustments |
SOURCE Tencent
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